We're now incorporating advertising at the bottom of the iPhone/iPod Touch XBOX Live Friends widget application. At the moment, it's somewhat experimental and I certainly welcome your feedback. Advertising will follow on the browser-based widget as well.
By placing the ad at the bottom of the widget, I hope that you'll find them unobtrusive and on occasion, maybe even helpful. Send a message to "borocouncilman" on XBOX Live and let me know your thoughts.
For those wondering, the Apple MacOS X Dashboard version of the widget will remain "ad-free" for the foreseeable future.
Thank you for your feedback and support!